Last week’s poll: Protecting UK steel

Protecting the UK steel industry from cheap Chinese imports would help the sector most, according to Engineer readers

There can be no doubt what our readers think would be the greatest help to the UK’s crisis-hit steelworkers, whose future remains in the balance this week as industry secretary Sajid Javid prepares to fly to India to discuss the issue with the current owners of threatened steelworks in Port Talbot and Scunthorpe and to meet a prospective buyer of the loss-making business, Sanjeev Gupta of commodities firm Liberty House, which bought the mothballed steelworks at Newport and the former Caparo business in Gwent last year. Of the 534 respondents to our poll, a clear majority, 55 per cent, said that the government should do more to protect the industry against low-cost imports of steel from China. The next biggest group, well down at 19 per cent of respondents, wanted more protection from energuy costs, while 12 per cent took the pessimistic view that we should just accept steel is a twilight industry with a limited future in the UK. Just 5 per cent thought that the costs associated with carbon emissions reduction was an important factor in the industry’s troubles, while 2 per cent thought the business rates the industry pays should be reduced. Seven per cent of respondents declined to pick one of our suggested options.

Please continue to let us know your opinions on this subject as the situation develops/

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Really a combination of the above. It’s not that Chinese imports are / were cheap, it’s that they were artificially priced – dumped due to local downturn. Need strategic intent to maintain UK steel-MAKING capability quite independent of employment and temporary economic issues.

None of the suggestions are remotely relevant, and underscores the fundamental misunderstanding of the most important factors. These things are only tinkering at the edges. There are crucial issues to deal with before the UK steel industry can compete with the best producers in the World, instead of trying to compete in the clog iron end of the market, on price alone, with the likes of China, Russia, and India.
The investment sums given by Tata are mainly to maintain production, and should be identified as such. For example, blast furnace relines are not capital investments. They are maintenance charges, and are classed as capital spend for accountancy purposes. There has been little expenditure on product quality in the last few years, in spit of more than a decade of record high prices. Instead of investing for the future, the income generated has been whittled away in other directions.
Provisions should have been directed at sourcing cheaper raw materials. The imported iron ores and coals have been bought at international prices, the company having little influence of their levels. The politically expedient closure of the UK coking coal mines was a disaster for the industry, and it will be hard but not impossible to re-open them now that there are no miners left to extract the coal.

“steelmaking in the UK has had its day and no longer has a viable future?”
If we accept this, why not go the whole way and accept that almost all manufacturing, civil engineering, shipbuilding, car making…. household appliances, mining and….the list is endless also have their day too. The economics of the mad house. But what else can we expect from the legacy of the casino economy that the grocer’s daughter and her ilk left. Of course these ‘industries’ do employ (or did!) large numbers of highly skilled persons: and do you know what, they formed themselves into crafts, unions, assemblies to obtain ‘fair’ returns for their effort(s). Such would never be resurrected if the Right has anything to do with it. When our country is totally covered with failed banks, retail parks, call centres, perhaps some sanity might prevail as our leaders ask themselves “what have we wrought”

As long as we are members of the EU the Governments options are very limited.
As Ian Glendining says, the country needs to decide whether the UK needs its own steelmaking capability. As Mike Blamey points out without a manufacturing base service industries would have no future so the answer probably has to be yes.
In this case the Government may have to talk seriously to China and slap on heavy import duties – and argue with the EU afterwards

“Building a better Britain” Like all incentives it needs to be believed and supported from the top down. Creating new jobs is as important as saving existing jobs, it happens in other Countries so its about time we looked at our Manufacturing base and not just the “service providers”.
Surely a job in Production is just as important as one in Banking, or is it Mr Prime Minister ?

Much of British manufacturing depends on the availability of high quality steel, which does not come from the far east.
It’s not only the steel industry at stake, it’s all the high-tech manufacturing companies that depend on it too.

It does indeed come form the far east. It comes from Japan. There are iron and steel making facilities there that can only be dreamed about in the UK. And the UK iron and steel making relies on technologies used under licenses from the Japanese producers. The UK producers of steel for the UK car industry have had to accept Japanese experts before it could be accepted, and even then compromises had to be reached.

UK carbon reduction targets may be very worthy, but they were conceived by inexperienced politicians in the Westminster bubble with no concept of the globally competitive world that our industries such as Steel operate in. It’s our duty in the UK to ensure that energy-intensive industries can maintain their costs at a competitive level or they will inevitably succumb to Asian competition, resulting in substantial irreversible unemployment suffering.

As extreme as it sounds, if we want to employ people in this country to actually make things, we need to protect the domestic market and use the profits to re-invest so that competitive rates for export are maintained. Nobody wants a nationalised millstone like Leyland or the NCB, nor the rampant militancy and unrealistic demands of ‘socialist’ unions, but without the domestic market as a foundation, any company/industry will fail. And if we can use the mountains of coal upon which we sit, rather than import low-quality East European lignite, or worse still, buy electricity from a German or French company’s Chinese-built nuclear plant, we’d have much more control over fuel prices – and create jobs by sinking new collieries.
The wild sell-offs of the 1980 and 90s were a bad time for the country, but these were partly brought about by deranged, left-wing unions holding the country hostage – not mining coal, flying pickets, arguments about ‘demarcation’ etc etc. We’re still feeling the effects and China is filling the gap, at a fraction of the cost.
The government should intervene in the short term, but without a guaranteed demand for your product, what hope is there? Unless people pay a bit more for their goods and buy the few things we do still produce, it won’t be long until we have absolutely nothing left. Where will the Scargills and Red Kens be then?? Blaming someone else, probably.

Phil
Are you just prepared to lambast the unions. Yes the militants share some blame. But you do not appear to be even handed and put some blame on some hopeless management of the times. I urge you to read Reach for the Skies about the poor management of the Aero industries and how they share blame in the demise of that industry

John, I said that the unions were partially responsible – implying that other factors were in play, too. Poor management/leadership, government meddling, bungled privatisation, dismissal of threats posed by foreign companies, general complacency… so many things were wrong with much of our formally great industrial base.
I’m sad to say that the career politicians who ‘run’ the country now have no idea about heavy industry or manufacturing; everything is ‘service industries’ and finance, but the problems are compounded by consumers, as I suggested previously. If people are happy to accept lower quality goods made in sweat shops that are cheaper than anything we can make, our own factories can’t compete. But that’s alright, we can ‘regenerate’. Close a mine or plant that employed 2000 people and build a retail/leisure park comprising chain outlets and a cinema. That’ll do won’t it?

Ian Glendinning
Really a combination of the above. It’s not that Chinese imports are / were cheap, it’s that they were artificially priced – dumped due to local downturn. Need strategic intent to maintain UK steel-MAKING capability quite independent of employment and temporary economic issues.

Precisely. If it were the ‘City of London’ and the financial institutions in the same situation, you can bet your last dollar/rmb/yen there would be some major interventions.

How many people do the steel makers employ…how many do we need….is automation not going to decimate heavy industry’s labour needs anyway? Compare with the hundreds of thousands directly employed by finance in London alone, that doesn’t include tangential services etc. or work outside of London.

The banks are the life blood of commerce in the uk. They fail, UK plc fails. Steel fails… it a local problem only. Sad reality but true.

For every one of the direct employees in the steel industry, there are around 10 others working in the services and supply industries to keep the works producing.
To produce around 1 million tonnes of steel needs the purchase of about £100 million of associated goods and services. So to look at the numbers of workers directly employed in the industry is naive indeed.

Our firearms industry has been decimated for all sorts of misguided reasons, but we still make out and away the world’s finest. The same applies to so many other things of British manufacture, and having our own steel industry is crucial to this.

One suggestion that I have put to my MP ( who ignored it and waffled on about Help for families where jobs are lost) was this. Put a GREEN tax on all steel imports. To avoid paying the tax the supplier must produce a certificate showing that the plant where steel was produced met our stringent green rules. To make it tough these certificates would have to be issued by OUR inspectors following plant inspections. It is not import duty so would not break those agreements or EU law.

The government should be aware that should there be another War the UK would be without steel making capability and be totally vulnerable.
We should use the EU in the same way that other countries do. i.e. Only abide by the supposed rules when it suits us.
The steel industry just wants a level playing field and it would be viable.
The following should all be looked at and decided on by the end of April 2016.
1. Energy costs the same as the lowest in the EU.
2. Business Rates the same as the lowest in the EU.
3. Forego the Carbon Emission Tax which none of our competitors outside the EU abide by.
4. Raise import taxes on all imported steel where the cost is over 20% below the European Norm.
5. Ensure all Government Projects where steel is used is supplied from :
a. United Kingdom
b. European Union

This is very naive. The government will do nothing. Steelmakers don’t contribute to Tory funds, steel plants (those that remain) are not in Tory areas and the Tories will do nothing to annoy their Chinese chums. The most we will get is hot air and muttering about market prices.

It is difficult for the UK government to give the help that is needed, as it will in effect be aiding foreign company, who will be able to use the help to fund their operation in other countries. This is just one of the problems created by allowing unrestricted foreign ownership of essential UK resources.

I am sure that the government will be pleased to add this to the list of excuses for inaction, Bert! And of course as Tata owns JLR, one of the flagship car makers that can do no wrong, HMG won’t want to upset them either but we should be asking the question of why British companies cannot stand on their own feet. Is it British managers, British banks, British governments? For my money, while there are shocking examples of bad management and the banks have left us all in a mess, there are shining examples of good British management (generally of foreign firms) and most banks behave well most of the time. No, it is the government that is mainly at fault by allowing companies to be taken over. I am not advocating interference when an emergency occurs (like Schweppes/Cadbury or Pfizer/AstraZeneca) but changing the corporate structure to encourage investment, stop slashing taxes, offer tax expenditures (ie allowances) only where neither dividend nor boardroom pay are excessive and allow shareholders to have a say only when they have held shares long enough to be investors rather than speculators. Lots of things should be done, none are being done and the government is making it worse by selling off even more to the rest of the world. Our forefathers and foremothers who sacrificed so much in the past must be throwing up in their graves.

British companies can’t stand on their own feet because the top management is so poor. It is not simply the money that foreign owners bring. British managers are not suitably technically qualified to manage complex industries. The workers in the car industry that were so disruptive when it was in the hands of British managers, are now happy to work for the new foreign owners.
In the UK, the management style is one of confrontation. This is so different to that in say Japan, where all opinions/ideas are welcomed. This style is practiced from the Government down, where discussion and compromise are seen as a sign of weakness.

Au contraire, Dave. There is no guarantee that a post-exit HMG (particularly this one) would do anything more to protect British industry. I agree that gold plating EU regulations has always been a stupidity but that won’t change – the first thing it would do would be to bend over for TTIP which would mean we may as well sign up for Washington and President Trump to build golf courses everywhere including in your back garden, and/or become an assembly plant to compete with China.

The only thing that stands between us and complete industrial devastation is the shadow of the EU, which does – I would be the first to agree – need substantial reform. All the same, we gain a lot from membership and leaving would be the kiss of death to what industry we have left. We need substantial political reform here that has nothing to do with the EU. I would start with complete devolution of the English regions (almost to Scottish level) with a Barnett 2 formula, and an elected upper house that has real teeth. I think we are the only ‘democracy’ in the world that has only a single chamber plus a talking shop, which is particularly galling as it was British civil servants and politicians post WW2 that set Germany on the path it now enjoys. Put our own house in order before blaming the rest of the world.

A good friend complained to me that his competitors were selling at unrealistic prices. They seem to have an exciting new business model – sell everything at way less than cost but make up for it with volume! Companies doing that invariably pay the ultimate price, and they did!
Low prices from China will end when enough of their uneconomic capacity goes bust. Until then, we should use all possible measures to ensure that our most efficient plant and the associated workforce is kept in running order. The tide always turns.

Previous comments all highlight deficiencies in the Government, specifically a lack of industrial strategy. It’s unable to deal with the inconsistencies in the way that the EU permits other countries to provide financial support to its industry. The UK wouldn’t need subsidy if we were competing on an equitable basis. Contributors have proposed solutions – which is more than politicians are able to do.
Perhaps we need a competency test – in the same way that ministers think schools should be governed. I don’t think the present make-up has anything relevant to offer.

Actually I can add a comment to the ‘artifically’ priced view expressed by Ian Glendinning (love the hat!) In the 70s, there were two UK manufacturers of special zips: (you use one such at least three times per day when you fulfil a particular bodily function!) A firm, based not a million miles from Asia (which has only initials in its name) paid for a journalist (who I knew well) to visit their factories there: mainly to ‘pump’ him. In essence they wished to know what price they should charge the UK garment trade for these zips and for how long would it be necessary to lose money doing so, until they could be sure that their UK based competitors would go bust: whence they could corner the market. and thence increase their prices to recoup. Sadly, that is exactly what occurred. With commercial practices like these, who needs competition?

One of the excuse the government will use is EU rules on support. A case of the EU costing jobs, the USA has taken 45 days to slap up to 200% tax on steel imports, outside the EU so could we impose whatever tariff we would wish to.

Does anyone know how much imported “Chinese” steel is used in UK manufacturing by industries that have traditionally used steel from Port Talbot (automobile and domestic appliance manufacture)?
If there is a case against imports I am sure there is a solution, however, I do believe that energy costs are a real killer to UK industry generally and not just the steel industry.
Mind you, in a few years time we will not have any energy left to power industry due to the ludicrous energy policy that this government is implementing (and I voted for them!)

Direct electrical energy costs have no bearing on iron and steel production via the blast furnace route. They are, of course, relevant to the scrap melters, but not to works such as Port Talbot. Their energy requirements are provided by the coking coal, with enough left over for power generation.
One should not confuse making steel from iron ore with re-making it by simply melting scrap in electric arc furnaces.

If we let the steel industry die completely, we will lose it forever, or at best relegate it to a small working museum. There are whole sections of industry that have been lost and cannot be recovered without un-feasible amounts of investment, so we end up buying from abroad.
Maybe mothball until times get better, but don’t kill it off

So today it is the steel industry. I live in a little town in the West Midlands called Willenhall, known previously as the lock making centre of the world (at one time over 80% of the world’s locks were made here).

Literally tens of thousands of people were employed in lock making, but now only a few hundred work in niche lock manufacture. I appreciate that locks are probably not as “sexy” as steel but this industry – along with many other regional manufacturing industries – was allowed to die without any government intervention.

Willenhall survived, but it is a much different, less dynamic town now, so I can appreciate that the big steel towns are concerned. But is it wise in the long term to save jobs regardless of cost, or to move on to find other more sustainable work, where the UK CAN compete?

“Whitehall has not only saddled the UK steel industry with higher energy costs than those in Germany or France, it has been blocking proposals by some other EU countries to tackle Chinese dumping through higher tariffs.”

The neoliberal headless chickens come home to roost is an appropriately mixed metaphor.

The simple answer is, outlaw the Tory debt-servicing con. But that would also mean sacking the neoliberal element within the European Commission, to restore national sovereignty (and scrap the TTIP). Then we just need to replace the political incompetents with people who understand the power of industrial innovation.

Port Talbot lies on one side of the Bristol Channel, Hinkley Point C on the other. Between the two is the solution to both problems – build the barrage from Aberthaw to Minehead that the RAEng has proposed. The prerequisite for that is a dry dock or two at Port Talbot to facilitate the production of the caissons, pressure vessels and all the novel renewable energy engineering for a green future.https://www.theengineer.co.uk/raeng-urges-more-action-on-innovation/

This strategy would also avoid the mistake of building the Swansea Bay Tidal Lagoon to the wrong design principles and the wrong financial model. How much does the state need to invest in Port Talbot to secure its future in renewable-energy heavy industry manufacturing? £2-3bn. They found a hundred times that much to prop up a crooked wunch of bankers, and £50bn can be put to better use by scrapping HS2.

“Why were taxpayer-funded banks so willing to lend to a big conglomerate to buy up an overpriced European company (Corus), even as they denied loans to Indian farmers and small-scale producers? Repayment of those loans was supposed to be made out of the profits of Tata Steel Europe. But those profits never came.” Well. . . .

Largely because Tata’s acquisition of Corus was in 2007 and the global casino of bent finance went into meltdown in 2008. (Teehee; the bank was paying a tax-free 6% on my ISA in 2010)

Any one who thinks that Cameron and Osbourne think Anything about the workers in our country are fooling themselves. They have got rid of all the mines now letting steel works go. Just wait and see what jobs they pick up when they leave government, only interested in themselves

Steel “making” may well have had its day and not just in the UK. Perhaps its time to focus on steel remaking

For several years now it’s been clear that the global increase in demand for primary steel would not rise forever. The downturn in new steel demand in China if it didn’t happen now would have happened down the line leaving us with an international over capacity. As economies become developed demand for new steel from ore plateaus and the main area of growth will be in creating new steel for scrap.

Now changing focus to electric arc furnaces, and getting involved in both the upstream and downstream supply chain certainly isn’t going to happen overnight and saving the likes of the Port Talbot plant will come down to much more immediate measures. However unless this more fundamental issue that affects all steelmakers worldwide isn’t addressed then any measure will only be a temporary solution.

We seem to have become a nation of shopkeepers….again?
This appears to be based on import of large quantities of “inexpensive” hardware made elsewhere, store these in hectares of specially built “warehouses” and sell them on with suitable markup (at no risk), to our countrymen. We then retire (with huge pension), to Westminster and buy up half of London.
Cynical?

“In the UK, the management style is one of confrontation.”
Not only the management style! our political system is adversarial (indeed the cunning old fox – insisted that Parliament be rebuilt in that style after WWII )
Our dispute settlement style is the same-great for those paid to be adversaries (mercenaries who never get hurt!) but by definition 4x as expensive as all our European colleagues. How does that ‘square’ with the slight increases in the prices of energy we must pay!

Those whose livelihoods depend on prolonging the conflict, NOT its outcome have held us all by the throat and the pocket (vicars, lawyers, military?) for so long they believe that is how God intended it to be! It could be different.

It is reassuring that the Government is at least paying lip-service to protecting the UK’s Steel industry. However, their idea of a result will most probably be to give the industry away to a Chinese investor and then subsidise their profits – all of which then get squirrelled away in China – or invested in London property without the tax charges incurred by UK taxpayers.

However, do not be deluded. All manufacturing is effected by China’s aim of economic domination, not just Steel-making – most particularly those involved in manufacturing from steel products. Perhaps we are dinosaurs and our days a clearly numbered, but why should we UK manufacturers be any less worthy of protection from the Dragon than those with union backing and large numbers on one payroll.

The answer to the conundrum is simple. Significant import duty in the region of 50%-100% Import Duty on ALL Chinese imports – or sorry, lets not call it Tax, I mean a Green Levy. This way the exchequer gains massive income to finance its increasing Debt, and UK manufacturers can again start producing. Simple, obvious, and necessary – a Win-Win situation – a no brainer in my view.

By allowing the Chinese to wipe out all our manufacturing – and saying ‘thank you very much’ we are making a mockery of our nation. The Americans and most of Europe think we are so naïve its laughable.

Again, note that this levy must not simply be on steel production, it needs to be on every other Chinese manufactured and imported item – mostly made using slave-labour, without regard to polluting the world, and priced at manipulated prices in Monopoly money.

Any UK manufacturer is also suffering equally as much as Tata. But only because closure of the steel industry would add 15,000 more to the benefits bill does the government start worrying. All those multitude of manufacturing industries going bust daily do not have a voice as individually they are insignificant to UK Gov. However, when taken together, they all add up to be part of the insidious rot.

Dumping is the term being used, but this is misleading. The fact is that China has been manipulating its exchange rates at artificial levels for years, exploiting its workforce, flaunting climate controls and flooding the world with cheap goods simply for the benefit of the smart Chinese elite. World economic domination has been their aim for the last decade. They are now close to achieving their objective.

http://www.bbc.co.uk/news/technology-36046939
Sadly, to implement the right innovation we have to understand future needs. That first requires all of us to embrace change, which is anathema to both politicians and the captains of industry. The vision of the future we must adopt is the circular economy. Steel is perfect for that. . . .

“On average, products made with steel last 35 to 40 years, and around 90% of all used steel is collected.” (Wind turbine towers and foundations are costed on a life-cycle of 25 years. Why?)

Gareth Stace, of UK Steel, told BBC News: “We don’t agree that there won’t be a new need for virgin steel – we think we need more capacity. But we welcome this report – especially the recognition that the steel sector has been starved of investment in technology.”

No indication of what that extra capacity would be used for!!

It is an unfortunate fact of (neoliberal) economic life that planned obsolescence is so popular with industries and long-term planning (investing tax-payers’ money) so unpopular with politicians. Not to mention the essential R&D that the private sector refuses to finance.

The key engineering lessons of history: The Forth Rail Bridge was well over-designed at high cost, following the Tay Bridge disaster, but, with adequate maintenance, who’s to say it won’t still be in use in the 22nd. century? The Forth Road Bridge has multiple issues of poor (corrosion) design and maintenance, shortening its useful life to just 50 years.

There are a number of comments about which UK (EEC etc) can do nothing. Mrs Thatcher made similar comments in the 90s…..British steel costs far more than steel made elsewhere.
The explanation given was misleading for political reasons.
Iron ore mined in UK was 20% or less iron, whereas Australian ore was 80% or more iron. The conversion costs of Australian ore to steel therefore started at 1/4 of the U.K.
China has been importing ore from Australia for about 15 years, hence the cost of their steel has been continuously reduced during that time.
The arbitrary imposition of unequal green tax on UK coal has not helped.